Stimulus Update: Up to 4.1 Million Households Are Owed $3.7 Billion in Stimulus Payments From the IRS. Is Yours One of Them?

Could you be owed some of the billions in unpaid stimulus funds?

Stimulus money was a lifeline for individuals and families throughout the COVID-19 pandemic. But not everyone got all of the money deposited into their bank accounts that they should have been entitled to receive.

In fact, a new report from the Treasury Inspector General for Tax Administration revealed that the IRS failed to send out an important financial relief payment to as many as 4.1 million households. The unpaid stimulus money totaled around $3.7 billion, and some eligible families could potentially still claim this money.

Here's what you need to know.

Auditors report showed the IRS failed to deliver billions

The audit conducted by the Treasury Inspector General for Tax Administration revealed that the IRS had failed to send out an important form of stimulus that was authorized in the American Rescue Plan Act. Specifically, the IRS missed around 4.1 million payments due under the expanded Child Tax Credit that this COVID-19 relief act authorized.

The American Rescue Plan Act changed the existing Child Tax Credit, which was worth up to $2,000 per child (only $1,400 of which was refundable.) The expanded credit was worth $3,600 per child for children under age 6 and $3,000 per qualifying child aged 6 to 17. The entire amount was refundable and payments of half the credit were made in the form of monthly deposits of $250 or $300 that took place between July and December 2021.

The Treasury Inspector General found the IRS had distributed 98% of the money properly -- but the remaining 2% was a huge sum. Around 4.1 million eligible households did not get the money they were due, and the unpaid money collectively added up to $3.7 billion. Unfortunately, at the same time, more than $1.1 billion was erroneously sent out to 1.5 million tax filers who were not actually eligible for the credit.

The IRS indicates it has taken some steps to correct this, including preventing further payments for taxpayers who were not actually eligible for the credit. However, former IRS commissioner John Koskinen did indicate in a Bipartisan Policy Center panel that some individuals who were eligible hadn't gotten their money yet.

Are you owed some of this money?

If you have a child and did not receive the expanded Child Tax Credit, you may be one of the individuals who is entitled to the unpaid stimulus funds from the IRS.

To find out if you missed out, first determine if you should have been eligible based on income. If your modified adjusted gross income was below $75,000 as a single filer or $150,000 as a married joint filer, you should have been eligible for the full credit. If your income was up to $200,000 as a single filer or $400,000 as a married joint filer, you should be eligible for a partial credit.

If your income wasn't too high and you had a qualifying child, you may still be able to claim the credit by filing a 2021 tax return. If you requested an extension, you have until Oct. 17, 2022 to submit your 2021 return. And even if you didn't request an extension, there's no penalty for filing late if you didn't owe any tax so you can still submit your forms.

You don't want to miss out on this money, so take action today if some of the billions in unpaid Child Tax Credit money belongs in your bank account.